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Income Security Act of 1974 ERISA: A
single-employer plan termination insurance program and a multiemployer plan insolvency insurance program. In general, a multiemployer pension plan is a collectively bargained plan involving two or more unrelated employers. This final rule deals with multiemployer plans.
Under sections 4201 through 4225 of ERISA, when a contributing employer withdraws from an underfunded multiemployer plan, the plan sponsor assesses withdrawal liability against the
employer. Withdrawal liability represents a withdrawing employers proportionate share of the plans unfunded benefit obligations. To assess withdrawal liability, the plan sponsor must determine the withdrawing employers: 1 Allocable share of the plans unfunded vested benefits the value of nonforfeitable benefits that exceeds the value of plan assets as provided under section 4211, and 2
annual withdrawal liability payment as provided under section 4219.

There are four statutory allocation methods for determining a withdrawing employers allocable share of the plans unfunded vested benefits under section 4211 of ERISA: The presumptive method, the modified presumptive method, the rolling-5 method, and the direct attribution method. Under the first three methods, the basic formula for an employers withdrawal liability is one or more pools of unfunded vested benefits times the withdrawing employers allocation fraction
The withdrawing employers allocation fraction is generally equal to the withdrawing employers required contributions over all employers contributions over the 5 years preceding the relevant period or periods. Under the fourth method, the direct attribution method, an employers withdrawal liability is based on the benefits and assets attributed directly to the employers participants service, and a portion of the unfunded benefit obligations not attributable to any present employer.

PBGCs regulation on Allocating Unfunded Vested Benefits to Withdrawing Employers 29 CFR part 4211 provides modifications to the allocation methods that plan sponsors may adopt. Part 4211 also provides a process that plan sponsors may use to request approval of other methods.
A withdrawn employer makes annual withdrawal liability payments at a set rate over the number of years necessary to amortize its withdrawal liability, generally limited to a period of 20 years.
If any of an employers withdrawal liability remains unpaid under the
payment schedule after 20 years, the unpaid amount may be allocated to other employers in addition to their basic withdrawal liability.
Annual withdrawal liability payments are designed to approximate the employers annual contributions before its withdrawal. The basic formula for the annual withdrawal liability payment under section 4219c of ERISA is a contribution rate multiplied by a contribution base. Specifically, the annual withdrawal liability payment is determined as follows
As the basic formulas show, withdrawal liability and an employers annual withdrawal liability payment depend, among other things, on the
value of unfunded vested benefits and the amount of contributions.
In response to financial difficulties faced by some multiemployer plans, Congress made statutory changes in
2006 and 2014 that affect benefits and contributions under these plans. The four types of changes provided for are shown in the following table:

2 Under ERISA sections 4211b and c, the presumptive method provides for 20 distinct yearby-year liability pools each pool represents the
year in which the unfunded liability arose, the modified presumptive method provides for two liability pools, and the rolling-5 method provides
for a single liability pool computed as of the end of the plan year preceding the plan year when the withdrawal occurs.

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Federal Register / Vol. 86, No. 5 / Friday, January 8, 2021 / Rules and Regulations